IN a report released on Friday evening, the Central Bank of Kenya revealed that mobile money transactions in the country remained stagnant throughout 2023, showcasing the enduring effects of higher inflation on the economy.
According to the apex bank, Kenyan citizens moved a total of KSh7.95 trillion (about $49.15bn) on their mobile phones in 2023, marking a decline from the $49.2bn transacted in 2022. This decline is particularly significant as it represents the first annual fall in mobile money usage in Kenya since its introduction in 2007.
During the course of the year, the highest amount of money, totalling $4.87bn, was transacted in December 2023, while the lowest, amounting to $3.57bn, occurred in February, as reported by the central bank.
The economic challenges faced by Kenyans in 2023, notably the rising inflation that peaked at 9 percent, played a pivotal role in constraining consumers’ spending power. The surge in the cost of fuel, electricity, and food contributed to this inflationary pressure, prompting a decline in discretionary spending.
Although there was a slight reprieve with inflation dropping to 6.6 percent in December 2023, it still exceeded the central bank’s target of 5 percent. This challenging economic environment is reflected in the unprecedented decline in annual mobile money usage.
The report also highlighted that the number of people employed as mobile money agents stood at 322,000 by the end of December 2023. Despite the downturn in transactions, subscriptions closed the year at a noteworthy 77.2 million, indicating sustained growth in the user base.
Analysts have pointed out that inflationary pressures typically lead to a reduction in discretionary spending, a trend observed in Kenya where a majority of consumers conduct their transactions through mobile money. The year 2023 has indeed presented unique economic challenges, reshaping the landscape of mobile money usage in the East African nation.